Pension lump sum payments and Housing Benefit 17 September 2022 at 1:10AM in Benefits & tax credits 1 reply 141 views

NorthTower

I have a question about pension lump sums in relation to HB claims.

In March of this year I reached pension age and am now receiving a state pension and claiming HB.

At this point I had no savings, but I had three small occupational pension pots, the first I took as a lump sum, the second as part lump sum and small annuity and the third was unavailable owing to catastrophic errors by the pension administration.

Altogether, I received £8,500 in lump sum and my HB is reduced by about £20 pw because my annuity pays £26 pw. So far so good.

Now back to the third pension - following a long and arduous complaints procedure, the fund is now available and stands at £14,700, and I have the option to choose what proportion I may take in cash or annuity. They are waiting for me to sign the form.

However, I have actually spent that £8,500 since March, so currently have no savings as such. I have actually been trying to access that third pot since February, but will now only receive payment probably in November, because they screwed up so badly?

Given the £10,000 disregard for pension lump sums, if for example I took a lump sum of £5,000 from the recovered third pot, would that be added to the £8,500 already paid, or would it be a separate calculation?  Obviously this could make a big difference to how much I decide take in cash and how it could reduce my HB entitlement.

I did act in good faith, I did try to action the third pension at the appropriate time, when I reached pension age, but I won’t get anything until maybe November because they screwed up?  The delay is entirely due to failures by the pension administration, and there is a substantial paper trail as proof of this. Obviously I would be making a change of circumstances declaration when the third pension finally arrives.

calcotti

The relevant capital is the capital you have. You no longer have the £8500 because you have spent it. The council might wish to know how you have spent the money to check that you have not deliberately deprived yourself of capital in order to increase your benefit entitlement. 

Obviously any regular pension payments are going to reduce your HB regardless of the impact of any capital over £10,000.